Financial Accounting, 8th Edition
8th Edition
ISBN: 9780078025556
Author: Robert Libby, Patricia Libby, Daniel Short
Publisher: McGraw-Hill Education
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Chapter 7, Problem 4CP
1.
To determine
Compute the period in which the production costs will be recognized under the new accounting method.
2.
To determine
Explain the manner in which both inventories and net income for the year increased, including those expenses in inventory.
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In an annual report, Dozer International, Inc., describes its inventory accounting policies as follows:
Inventories are stated at the lower-of-cost-or-net-realizable value, with inventory cost determined using the first-in, first-out (FIFO) method. The cost of inventory includes freight-in and duties on imported goods.
Also in an annual report, Moo Metal Corporation made the following statement in discussing its inventories:
The company recorded pretax charges of approximately $19.4 million because of a reduction in the carrying values of its inventories caused principally by prevailing lower prices for alumina, primary aluminum, and fabricated products.
What accounting principle did Dozer International follow when it included the costs of freight-in and duties on imported goods in its Inventory account? Briefly describe how a firm determines which costs to include in its inventory account. What accounting principle did Moo Metal follow when it recorded the $19.4 million pretax charge?…
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Granger Supply, Inc., has two main areas of inventory, industrial supplies and industrial cleaning equipment. The FIFO inventory method is used for industrial supplies, and the LIFO method is used for the cleaning equipment. Prior to considering special interim reporting modifications for LIFO liquidations and lower of cost or market, the company reported the following results for the first two quarters of the current year: Quarter 1 Quarter 2Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,000,000 $9,000,000Cost of sales—industrial supplies . . . . . . . . . 4,300,000 4,700,000Cost of sales—cleaning equipment . . . . . .. . 3,000,000 3,200,000Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,700,000 $1,100,000Selling, general, and administrative . . . . . . . 2,100,000 1,800,000Income before taxes . . . . . . . . . . . . . . . . . .…
Chapter 7 Solutions
Financial Accounting, 8th Edition
Ch. 7 - Why is inventory an important item to both...Ch. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - The chapter discussed tour inventory costing...Ch. 7 - Prob. 7QCh. 7 - Contrast the effects of LIFO versus FIFO on...Ch. 7 - Contrast the income statement effect of LIFO...Ch. 7 - Prob. 10Q
Ch. 7 - Explain briefly the application of the LCM concept...Ch. 7 - Prob. 12QCh. 7 - Consider the following information: ending...Ch. 7 - The inventory costing method selected by a company...Ch. 7 - Which of the following is not a component of the...Ch. 7 - Consider the following information: beginning...Ch. 7 - Consider the following information: beginning...Ch. 7 - An increasing inventory turnover ratio a....Ch. 7 - If the ending balance in accounts payable...Ch. 7 - Prob. 8MCQCh. 7 - Which inventory method provides a better matching...Ch. 7 - Which of the following is false regarding a...Ch. 7 - Prob. 1MECh. 7 - Recording the Cost of Purchases for a Merchandiser...Ch. 7 - Identifying the Cost of Inventories for a...Ch. 7 - Inferring Purchases Using the Cost of Goods Sold...Ch. 7 - Prob. 5MECh. 7 - Matching Inventory Costing Method Choices to...Ch. 7 - Reporting Inventory under Lower of Cost or Market...Ch. 7 - Determining the Effects of Inventory Management...Ch. 7 - Prob. 9MECh. 7 - Prob. 1ECh. 7 - Inferring Missing Amounts Based on Income...Ch. 7 - Prob. 3ECh. 7 - Inferring Merchandise Purchases Abercrombie and...Ch. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Prob. 8ECh. 7 - Prob. 9ECh. 7 - Evaluating the Choice among Three Alternative...Ch. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Prob. 14ECh. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Prob. 18ECh. 7 - Prob. 19ECh. 7 - (Chapter Supplement A) Analyzing the Effects of a...Ch. 7 - (Chapter Supplement B) FIFO and LIFO Cost of Goods...Ch. 7 - Prob. 22ECh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Evaluating the LIFO and FIFO Choice When Costs Are...Ch. 7 - Prob. 6PCh. 7 - Evaluating the Effects of Manufacturing Changes on...Ch. 7 - Evaluating the Choice between LIFO and FIFO Based...Ch. 7 - Prob. 9PCh. 7 - (Chapter Supplement A) Analyzing LIFO and FIFO...Ch. 7 - Prob. 1APCh. 7 - Prob. 2APCh. 7 - Evaluating the UFO and FIFO Choice When Costs Are...Ch. 7 - Prob. 4APCh. 7 - Prob. 1CPCh. 7 - Prob. 2CPCh. 7 - Prob. 3CPCh. 7 - Prob. 4CPCh. 7 - Using Financial Reports: Interpreting Effects of...Ch. 7 - Making a Decision as a Financial Analyst: Analysis...Ch. 7 - Evaluating an Ethical Dilemma: Earnings, Inventory...Ch. 7 - Prob. 1CC
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Inventory management; Author: The Finance Storyteller;https://www.youtube.com/watch?v=DZhHSR4_9B4;License: Standard Youtube License